HAJEE MOHAMED IBRAHIM Vs. GIFT TAX OFFICER

JUDGEMENT

(1.) THESE two writ petitions are directed against the two notices issued by the respondent, GTO (Special), Mysore Circle, Mysore, under s. 16 of the G.T. Act, 1958 (hereinafter referred to as "the Act") By the said notices relating to the assessment years 1974-75 and '1975-76, the respondent, GTO had proposed to bring to tax under the Act certain gifts made by the assessee which had escaped assessment in the relevant assessment years. He has also called upon the petitioner to file the returns for those assessment years for the purpose of bringing to tax the escaped gifts. Aggrieved by the same, the petitioner has approached this court under art. 226 of the Constitution, inter alia, contending that the respondent, GTO, had no jurisdiction to reopen the assessment under s. 16(1) of the Act as none of the ingredients required for such reopening of the assessment is to be found in the case of the petitioner for the aforementioned assessment years. For expeditions disposal of these petitions, this court issued notice to the respondent, GTO, calling upon him to show cause why Rule should not be issued. In response to the same, the respondent has entered appearance and it is contended for the respondent that the petitioner, for the assessment years in question, had not disclosed in his return gifts made to his wife, as evidenced by the notes of the respondent, before issuing the impugned notices, and therefore, the notices. The short question which falls for determination in these petitions is whether the respondent on the admitted facts can be said to acquire jurisdiction in the case of the petitioner for the relevant assessment years to reopen the assessment in terms of s. 16(1) of the Act. I may straightway say that s. 16(1) of the Act is in pari materia with s. 147 of the I.T. Act. Section 16(1) of the Act reads as follows :

(2.) THERE are a number of decisions under s. 147 of the I.T. Act as well as under s. 16(1) of the Act explaining the scope of the sections to which I will make reference shortly hereafter. The plain language of s. 16(1) of the Act indicates that one of the first requisites for assuming jurisdiction under that section is that the GTO should have reason to believe that the assessee had omitted or failed to make the return under s. 13 of the Act in respect of gifts made by him or any other person in respect of which the assessee is liable under the Act in any assessment year, or when the assessee has failed to disclose fully and truly all material facts necessary for the assessment of the gifts made by him or such other person for the relevant year (or when) any taxable gifts of his escaped assessment at too low a rate or otherwise. The other instance which confers jurisdiction on the GTO under s. 16(1) of the Act to take action is that as a consequence of any information in his possession, he has reason to believe that even though there was no omission or failure on the part of the assessee as indicated in clause (a) of sub-s. (1) of s. 16 of the Act that any taxable gift had escaped assessment for any year whether on account of under - assessment or assessment at too low a rate or otherwise.

(3.) PERUSAL of the assessment orders for the assessment years 1974-75 and 1975-76 clearly disclose that there is considerable discussion in the matter of certain transfer of properties in favour of his wife. It was contended by the petitioner that it was not gift but payment of consideration as dower. In other words, the GTO was aware that in the relevant assessment years properties had been transferred to the wife, the GTO contending them to be gift and the assessee contending them to be transfer in payment of consideration of dower. The orders also disclose that gifts in respect of which exemption was claimed under s. 5 of the Act was disallowed by him except for the assessment year 1975-76 in respect of one item.